The government has made no secret of its intention to step up checks on businesses as part of its war against tax evaders. It was announced by the Inland Revenue that a programme of business record checks (BRC) is to be introduced.
This policy ran into trouble in February 2012 and so is expected to be re-launched in April 2013 with the promise to “refocus” resources in 2013.
So what should you expect?
Initially the taxman will contact your business by letter in order to arrange a telephone interview. This interview will cover a number of questions upon which they will assess your record keeping and whether you are fulfilling your legal responsibilities.
Based on your replies the outcome of this interview could result in one of three actions being taken.
1.Your records are accurate and no further action need be taken.
2.You need some help and support which the Inland Revenue will offer to provide.
3.Your records are inadequate and a face to face visit is required.
Bookkeeping is one of the necessary evils of running a business. However it can be a lot easier if you put good bookkeeping practices into place from the onset. So what can you do to ensure your record keeping is in good shape? Here are a few tips.
1.Use a “friendly” system
Most small businesses do not need a complex bookkeeping system to record their transactions. Whether you use a manual accounts book or software package make sure the system is one you are comfortable with and can understand how it works.
2.Keep the right information
Make sure you keep any information, including documents, invoices and receipts that you may need to support your income and expenses. These should be kept in an orderly fashion. Where necessary make additional notes to further explain transactions. You may need to explain matters in a year’s time so notes made today could save a great deal of head scratching later.
3.Keep your bookkeeping up to date
Get into a routine of updating your records on a regular basis rather than letting the paperwork pile up, as this would only add to your administrative burden later. Also it increases the likelihood of things getting lost. It is good practice to have a once-monthly sit down and bring your accounts up-to-date.
4.Try not to throw anything away
Not only will the document you throw away be the one you are guaranteed to need later but you do have a legal obligation to keep your business records for defined periods.
Keeping up to date, accurate and meaningful records will also help you to have a better picture of your business and therefore be able to run it more efficiently and increase profits.
Hopefully by following these simple tips you will keep the taxman at bay and prevent a visit.
At Batsford & Co we specialise in helping small and medium sized businesses in reducing their accounting and tax headaches. If you would like to discuss any of your business requirements, our contact details can be found at www.batsfordandco.co.uk